Aussie Price Outlook: Australian Dollar Breakdown Eyes Trend Support

2019-10-25 14:30:00

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Australian Dollar Price Chart – AUD/USD Daily
Australian Dollar Price Chart – AUD/USD 120min
Australian Dollar Trader Sentiment – AUD/USD Price Chart
Key Australia / US Data Releases
Active Trade Setups

Australian Dollar pullback targeting uptrend support- Focus is on pivot off 6800
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The Australian Dollar has is down more-than 0.3% against the US Dollar since the start of the week with Aussie now testing monthly uptrend support. These are the updated targets and invalidation levels that matter on the AUD/USD price charts. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Sterling price setup and more.

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Australian Dollar Price Chart – AUD/USD Daily

Chart Prepared by Michael Boutros, Technical Strategist; AUD/USD on Tradingview

Technical Outlook: In my latest Australian Dollar Price Outlook we noted that Aussie was approaching confluence resistance and to, “be on the lookout for possible exhaustion here but we’ll broadly favor fading weakness while above 6768…” AUD/USD reversed of confluence resistance at 6880 early in the week with the pullback now eyeing uptrend support at the 61.8% retracement near the 68-handle -note the highlighted trendline confluence just lower. Key resistance steady at 6880 with a breach / close above needed to fuel the next leg higher in price targeting 6927.

Australian Dollar Price Chart – AUD/USD 120min

Notes: A closer look at Aussie price action shows AUD/USD trading within the confines of a near-term ascending pitchfork formation extending off the monthly lows with price currently trading just above the lower parallel / key support at 6801/09- we’re looking for possible exhaustion down / pivot here. Initial resistance stands at 6833 with a breach targeting the weekly open at 6844 and the 61.8% retracement at 6855- look for a bigger reaction there IF reached with a close above needed to shift the focus back to the long-side. A break of this key pivot zone would suggest that a larger correction is underway with such a scenario risking a drop towards 6768.

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Bottom line: The Aussie pullback is testing monthly uptrend support and needs to hold the 68-pivot zone IF price is indeed heading higher. From at trading standpoint, look to reduce short-exposure / lower protective stops on a test of the lower parallel. We’ll be on the lookout for a possible exhaustion low while within this formation – favor fading weakness while above the figure. Review my latest Australian Dollar Weekly Outlook for a closer look at the longer-term USD/CAD technical trading levels.

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Australian Dollar Trader Sentiment – AUD/USD Price Chart

A summary of IG Client Sentiment shows traders are net-long AUD/USD - the ratio stands at -1.14 (53.27% of traders are long) – neutral reading
Long positions are 5.40% higher than yesterday and 9.52% lower from last week
Short positions are10.88% lower than yesterday and 20.77% higher from last week
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests AUD/USD prices may continue to fall. Traders are more net-long than yesterday but less net-long from last week and the combination of current positioning and recent changes gives us a further mixed AUD/USD trading bias from a sentiment standpoint.

See how shifts in AUD/USD retail positioning are impacting trend- Learn more about sentiment!

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